By : Riza Buditomo
As you may be aware the Minister of Finance issued Minister of Finance Regulation No. 190/PMK.04/2022 on Self-Consumed Imported Goods ("MOF Reg 190") which takes effect on 14 January 2023.
This regulation provides a new import declaration submission mechanism of consumed goods in the form of intangible goods, e.g., software for server products or other digital goods, which include software and digital goods that are transmitted electronically. This regulation is a complementary of MOF regulation which issued the infamous Chapter 99.
So, imported goods are not only in the form of tangible goods but they also in the form of intangible goods
2. Summary of MOF Reg 190
Under MOF Reg. 190, the import of intangible goods to Indonesia, such as software and other digital goods that are transmitted electronically, is subject to Import Declaration (PIB) requirements. This is not a new requirement per se but this is now being specifically set out in MOF Regulation 190. The regulation, however, lacks specifics on the software types that are liable to import duties and taxes.
The situation is still fluid but the Customs officials have started to interpret the intangible goods as the following:
According to MOF Reg. 190, Customs officials may question whether or not the software is related to the imported goods. In addition, Customs officials would also question whether the software is a service or downloadable.
III. Recent Experience
It is important to note that MOF Reg 190 is a gate opener for customs auditors to look further details of importation, in posting journal entries, in consistency of payments to vendor or of inter- company charges etc. In recent experience (a customs audit) they have been very active in checking payment schedules related to purchase of software or services to include them as dutiable goods.
Customs officials also questioned whether the software is a service or downloadable software as well as conducting below checking:
The Customs auditors also tried to include any intangible importation prior to MOF Reg 190 and simply trying to implement MOF Reg 190 retroactively. (of which we think that should not be the case).
We anticipate that these patterns will persist in Indonesia for the upcoming years since audits are becoming routine. Additionally, we observe a tendency where audits are conducted biennially, immediately following the previous one.